Queensland drags down new home sales

Sales of new detached houses declined for the second consecutive month during February, although several key markets experienced growth.

Results for February 2018 are contained in the latest edition of the HIA New Home Sales report, a monthly survey of the largest-volume home builders in the five largest states.

“The decline in new house sales during the first two months of 2018 is consistent with our expectation that residential building activity will move lower over the next 12 months,” HIA senior economist Shane Garrett said.

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“Tighter restrictions around investor lending and heavier obstacles to foreign investor participation are contributing to the weaker conditions in new dwelling construction.”

NSW bucked the national trend in February, with the state seeing decent growth in new house sales. Mr Garrett noted that there were several favourable changes made by the NSW government relating to first home buyers last year that have been beneficial to the state’s housing industry.

However, the HIA is forecasting that new home sales will trend downwards during 2018 in line with new home building activity.

“We expect things to bottom out in late 2019 before modest growth resumes,” Mr Garrett said.

Despite the fact that the overall volume of sales declined during February, reductions only occurred in two of the five states covered by the HIA New Home Sales report, and the magnitude of these reductions outweighed the increases that took place elsewhere.

The largest fall was in Queensland, at -16.3 per cent, with a 9.9 per cent contraction recorded in WA.

The largest increase in sales was in NSW, at +11.7 per cent, followed by SA at +10.3 per cent and Victoria at +4.8 per cent.